“Wal-Marts and Ferraris”

Abstract

For a number of decades, it was quite normal to find in most product categories three clearly discernible tiers of products and services. Each category had a series of items positioned at various price points within the discount segment; there was a huge selection in the middle-market segment, and a large, but not excessive, number of brands in the luxury segment. From the consumer’s point of view, there was more than an adequate quantity of products and offerings available — with new ones joining them every month or year. Within each tier, only a few products, however, really had their own autonomous profile, a distinct brand identity, so the consumers predictably lost track of things and were merely confused by all these developments. A prospective buyer saw no further point in paying more for certain higher-priced items when there were no longer any salient differences compared with less expensive ones belonging to the same tier. This three-way split, however, seems now to have disappeared.